The GBPEUR exchange rate is back near the 1.15 level on Wednesday after struggling to hold onto its gains from the latest GDP growth figures. The pound saw a high of 1.1573 but failed to capitalise on the data and the start of the country’s next reopening phase.
The GBP to EUR may move lower towards the 1.14 level and tomorrow and Friday sees inflation numbers for Europe and Germany.
Pound Lower as Haldane Set to Leave
The GBP to EUR rate gave up a strong morning of gains after an announcement that the Chief Economist at the Bank of England would be leaving. Andy Haldane has been at the bank for thirty years and has been one of the more ‘hawkish’ figures over the last year.
His exit from the bank will remove a voice for faster tapering and interest rate rises. Mr Haldane will step down from the Monetary Policy Committee after its June meeting to take up a post with the Royal Society of Arts.
The reshuffle raises questions about the timing of the move after the economist went against the bank’s governor Andrew Bailey on his inflation expectations. As central banks try to cool any talk of higher inflation, it may be that Haldane was pressured to go after disagreeing on the bank’s economic outlook. The BoE are expected to set out an exit strategy in 2022 from its ultra-low interest rate policy before hiking rates in 2023, but that strategy could be thwarted if inflation rises from the country’s reopening.
The pound was higher versus the euro on Tuesday after the release of the latest GDP estimates. The figures showed a rise of 0.4% in February for the UK economy and sets the economy up for its next phase of reopening, which began on Monday.
Brussels facing Higher Vaccine Costs
Brussels was looking at another vaccine headache as Pfizer increased the cost of its coronavirus jab by 60% for any new orders made by the European Commission.
The New Jersey-based company has increased the cost of future vaccines sold to the EU from €12 per shot to €19.50. Contracts for 900 million jabs at the higher price are now being signed, with delivery said to be 2022 and 2023, according to Bulgaria’s Prime Minister.
The news comes at the same time as the Johnson and Johnson single shot vaccine rollout was also delayed in Europe after reports of blood clots in the US.
The GBPEUR is ignoring the pressures on the EU’s vaccination campaign and is assuming that the EU will reopen soon and mount its own recovery, but the UK is moving ahead with tangible results and this will play into future growth figures.
Thursday will see the latest inflation figures from Germany, whilst Friday will bring the latest update for inflation from the Eurozone. Pressure remains on sterling after last week’s heavy losses with traders worried that they overvalued the pound.
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